Nov
21
2008

New Math Yields Old Story

Via Beat the Press: Saying he "might expect it from right-leaning commentators like Will Wilkinson" but not "from someone like Mark Perry, who lives in Flint, Michigan," Felix Salmon of Portfolio notes (11/18/04) that "all of them are perpetuating the meme that the average GM worker costs more than $70 an hour, once you include health and pension costs." Just one problem–"It's not true":

The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure (or $73 an hour, or whatever) is a ridiculous number obtained by adding up GM's total labor, health and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers….

As of 2007, the UAW represented 180,681 members at Chrysler, Ford and General Motors; it also represented 419,621 retired members and 120,723 surviving spouses. If you take the costs associated with 721,025 individuals and then divide those costs by the hours worked by 180,681 individuals, you're going to end up with a very large hourly rate. But it won't mean anything, unless you're trying to be deceptive.

We take exception to one part of Salmon's otherwise strong debunking. He says, "You certainly wouldn't expect to see it in the New York Times." Yeah, we would.